Grain Report Thursday - 09th March
Our goal is to help growers and their agents determine the selling price for their grain by providing relevant price discovery each day. Check out the moves in overnight international markets and yesterday's actual traded prices across Australia. There's also market commentary giving context and comparisons to prices of international physical markets. If you need to change your offer price, simply edit it before market open.
What price do you want for your grain?
Look Out!
WASDE matter you, Hey,
Gotta too much grain, hey.
It’s a not so bad.
Are shut uppa ya face.
Yep, the USDA released their Word Ag Supply & Demand Estimate Guess (WASDE) last night.
They still have the Russian wheat crop at 92 million tonnes. They refuse to admit defeat and move this number up to 100 million tonnes.
They did however, increase the Aussie wheat crop to 39 million tonnes, in line with A Bear in There’s guess.
Overall, they increased world production up 5 million tonnes to 789 million tonnes.
Which would make one immediately hop onto Clear Grain Exchange and sell your wheat, as it’s a bearish signal.
However, before you throw the baby out with the bath water, the USDA decided to go back in time and adjust the 20/21 Chinese numbers, which reduced the carry in stocks for the current marketing year.
This reduced world carry in stocks by 4 million tonnes. World consumption was also increased by 2 million tonnes, as more wheat gets fed in place of corn. Humans can’t be eating any more as we are gluten intolerant.
The result after tweaking the previous seasons numbers like Mylie Cyrus was a reduction in world carry out stocks by 2 million tonnes to 267 million tonnes.
If we remove China from the world wheat balance sheet, or as we refer to it as “Chinese Take Away”, the world stocks increased by 3 million tonnes to 127.62 million mt, or a stock to use ratio of 20%.
What does that mean?
The world without China eats around 650 million tonnes of wheat per year, or 1.8 million tonnes per day.
We have 127 million tonnes of stock, which is 71 days’ worth, and 71 days of the year is 19.5.
Or you could just divide the stock by what we consume, and it spits out the same number, but I like to use days as it creates more fear as we only have just over 2 months of wheat in the cupboard before we all starve to death.
I am neutral on the world wheat S&D for this season. Things will get more exciting near year, as stocks held by the big exporters fall away.
Also, the excitement with the wheat crop will be over the next 2-3 months as crops come out of dormancy, and India’s crop shrivels up under the heat wave.
The world corn Supply and Demand is a little more interesting, with the Yanks reducing the Argie corn crop down by 7 million tonnes to 40 million tonnes.
They didn’t shave anything off the Brazilian crop, leaving it at 125 million tonnes, but don’t forget, things might get a little hairy in Brazil as their 2nd corn crop planting is well behind pace and yield could be impacted.
The Yanks knocked 6 million tonnes off corn consumption, which highlights a tightening balance sheet, which supports prices. Brazil is also going to produce more corn based ethanol, which doesn’t seem to be factored in. Watch this space.
I am bullish corn. I can’t imagine a more beautiful thing. It's Corn; a big lump with knobs.
World soybean production was dropped 8 million tonnes, with the Argie crop being reduced by the same amount, down from 41 million tonnes to 33 million tonnes.
World soybean stocks are now almost the same as last year, around the 100 million tonnes.
The sentiment for this market is still bullish.
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